COURSE CALENDAR

Course Outline for BUS 491 (03/06) — Seminar in Management Strategy & Policy

Sonoma State UniversityTuesday & Thursday: 10:00 – 11:50 a.m. & 1:00 – 2:50 p.m.

January 27 – May 14, 2009

QuickTime™ and a decompressor

are needed to see this picture.

Dr. Armand GilinskyProfessor of Business

Stevenson 2026F: 707.664.2709 (W 2-4 pm & by appointment)Sonoma State University

Rohnert Park, CA 94928 [email protected]

mailto:[email protected]

BUS 491 — Sections 3 and 6 Dr. Gilinsky/page 2Spring, 2009

Required text: Hunger, J. D. and Wheelen, T. L. (2007) Essentials of Strategic Management, 4th ed., softcover, Pearson/Prentice-Hall. [Essentials]

Instructor website: www.sonoma.edu/users/g/gilinsky/Username: gilinskyPassword: TBA in class

By accepting this learning contract, I (the student) also agree to abide by and comply with the terms of the University’s Honor Code.

Welcome to our Spring 2009 Strategic Management course! My vision is to help you to generate world-class, cutting-edge business solutions. The

overriding objective of this course is to provide the questions you need to ask to make the right decisions about the future of a business or non-profit organization. Strategic management entails generating choices to be made among competing alternatives to produce a competitive advantage and earn above-average returns.

Rapid technological change, mergers and acquisitions, increasing pressures for globalization, and changing local environments for businesses have heightened the urgency to ask the right questions about the future, such as:

1. Which distinctive competencies should we be developing for our businesses?2. Where should we compete?3. How do we communicate our strategy to our stakeholders?

We will indeed be fortunate to have your collective wisdom as well as that of possible guest speakers from the business community to help guide us through complex strategic issues.

Learning objectives. The primary goal of this course is to teach you how to think and act strategically. By successfully completing BUS 491, you will learn:

1. What are the interrelationships among the functional areas of an enterprise;2. How to develop and use skills in decision-making and oral and written presentation;3. How to analyze, formulate and implement strategies, especially the role of top

management teams in performing these activities.

By the end of the course, you should be able to analyze thoroughly a company, its industry and its competitors and to recommend a well-supported strategy to your Board of Directors.

Course description. This course in business policy focuses on integrative, multifunctional approaches to the solution of organizational issues and problems. A practical perspective, rather than a merely theoretical one, is stressed via discussion of case studies. Why use a case-study approach? Three levels of learning take place:

1. We share the generalized insights of leading theoreticians;2. We test the applicability and limits of these theories to specific case studies; and3. You develop your own special amalgam of insights based upon empirical

observations and inductive reasoning (from case analyses).

http://www.sonoma.edu/users/g/gilinsky/


How are cases used in BUS 491?

• As discussion vehicles for probing the benefits and limits of certain approaches;• To provide class members with opportunities to apply and test concepts and tools

related to dimensions of management thought (e.g., marketing, accounting, finance);• To help you to understand the nature of “better” answers, as well as the complexity of

reaching solutions and implanting them in organizations.

What do you—as class member—need to do? First, understand what went on in that situation:

• What has changed? • What are the key questions about the future that need to be answered? • What further information is needed to answer those questions?

Major emphasis is placed on action and implementation, not just on analysis. Each case features a top management team (TMT) facing a specific set of issues and problems. So, during the course, you will have an opportunity to see a wide range of TMTs in action, and to think about their specific choices and actions as if you were the TMT in charge.

This course calls on you to integrate concepts of all other prerequisite business courses, i.e., bringing together and applying the learning from core courses to the analysis and solution of strategic management problems. The course is intended to enhance the following skills:

1. Your ability to decipher detail and to analyze information in order to identify and to diagnose the major problems and opportunities confronting business organizations;

2. Your ability to take a cross-functional, top management perspective in developing feasible overall strategies as well as specific problem solutions;

3. Your ability to decide from among alternative courses of action and to formulate feasible plans for their implementation;

4. Your ability to present a position and to defend it.

Study groups. You will be assigned to study groups consisting of four (4) members, meeting regularly to discuss the cases and readings before they are discussed in class. Teams may not exceed four members without my permission. The aim of these groups is to share and critique individual analyses and to enhance class participation. Class time is set aside for meetings; as the course progresses, you may find it necessary to spend several hours meeting outside of class.

Class participation. You should come prepared for class discussion of cases and supplemental readings, that is, with an outline or condensation of your case analysis, stating your perception of the underlying problem, some supportive data, and your recommended plan(s) of action. Bear in mind how difficult it is to assess your participation if you are absent from class! Attendance will be taken. Each student will be permitted one (1) unexcused absence. Your class participation grade will be based on: 1) evidence of careful preparation of the cases and readings; 2) clarity and conciseness of your analysis; and 3) strong and convincing presentation of your findings and conclusions. Guidance for class participation is on p. 10.

Performance evaluation. Strategic issues seldom have clear-cut or singularly “right” solutions. This means that my evaluation of your performance will be based upon your managerial aptitude


in problem diagnosis, generation of solutions, and communication of your position. I will be looking for demonstration of logical argumentation and consistency in your thought processes. Grades will be based on your performance in (a) oral discussion and argument (defense) of your ideas and (b) written communication. Final grades will be on a curve, with the top 20% of the section receiving “A or A-,” the middle 70% receiving “B+/B/B-,” and the bottom 10% receiving grades in the “C” or “D” range. These will be weighted as follows:

Class preparation, attendance & participation [see p. 10].....................................50%Written case analysis [ten (10) issue briefs, see Format below and pp. 5–7].......30%Final team presentation [in class, 5/12 & 5/14, see pp. 13-15].............................10%Final team written examination [due in class 5/19, 11:00 a.m., see p. 14].......... 10%

Total...................................................................................... 100%

Format for written case analyses (“Issue Briefs”). In order to create opportunities for us to explore more basic strategy issues and discuss methods of formulation and implementation that might otherwise have to be rushed, we will use an electronic submission format for Issue Briefs. Please submit your individual case analyses as an MS Word file attachment (double-spaced, 2 pages maximum, Times New Roman 12 pt font, 1-inch margins) to me at [email protected] with both the e-mail subject line and file name reading <CaseAbbrev.yourlastname.doc> (e.g., for “Robin Hood,” RH.Gilinsky.Doc). Please use the following format:

1. Indicate your key case decision (what the GM needs to do now and why) in one succinct sentence (17-20 words, maximum);

2. Support your decision by three (3) bullet points – less than one line in length; use dimensions of strategic management thought; avoid judgment here; your three bullet points are essentially a table of contents (preview) to the rest of (body) of your analysis;

3. Add any qualitative and/or quantitative comments/discussion which you feel is/are necessary to substantiate your analysis. (1-2 page limit, about 250-500 words, plus exhibits, which should be numbered consecutively and referred to in the body of your analysis); and then

4. Conclude by restating the central problem or issue and recommendation for action, stating lessons learned about strategic management, linking to readings that you have gleaned from the Essentials textbook.

Do not merely answer the study questions! Study questions (to be sent to you via e-mail as part of the “Tips of the Week”) are intended to get you thinking about the issues in the case and to lead you through the process of analysis. Issue Briefs are due in my e-mail In-Box by 8:00 a.m. on class days for which Issue Briefs are assigned (see Course Calendar, pp. 5-7). Timely submission of case analyses will facilitate review of your work as well as a summary of the section’s qualitative/quantitative comments. You should always keep a hard copy of your Issue Brief for yourself and bring this to class. Your Issue Brief will serve as a personal document from which you could lead a class discussion. Acceptable Issue Briefs are given a “check,” which is roughly equivalent to a “B” grade. Unacceptable or late submissions will be assigned a “check minus,” roughly equivalent to a “C” grade. Issue Briefs not submitted on the date due for

mailto:[email protected]


any reason will be assigned an “F” grade. An outstanding effort will receive a “check plus,” roughly equivalent to an “A” grade. Grading and coaching comments on your Issue Briefs will be returned to you as soon as possible.

Final examination. The final examination (see pp. 13–15) will consist of an oral presentation and a written case analysis, both prepared and submitted by your study group team. The final examination will give you the opportunity to present and write a lengthier case analysis and will be assigned a letter grade. NOTE: written case analysis (issue brief) assignments due in the latter half of this seminar, i.e., # 6-10, will be weighted twice those due at the beginning.

COURSE CALENDAR

Date Topic(s) Assignment(s)Tuesday, January 27, 2009 Course introduction

Thinking for yourselfRead/prepare: SyllabusDiscuss: Class cards and one-page résumé assignment (due 2/3/09 in class)Intro: course overview “lecturette”Outro: Dead Poets' Society (video)

Thursday, January 29, 2009 Building teamsCore purpose and valuesOur values

Manager’s Toolkit Exercise (in class – see Syllabus, p. 16)Core Purpose & Values Exercises (see Syllabus, pp. 11&12)

Tuesday, February 3, 2009 Tools for dialoguingStrategic analysis frameworkCritical thinking

Read/prepare: Essentials, Ch. 1 and Case: “Robin Hood (see Syllabus, pp. 17&18) Meet in study groups (25 minutes)Class discussion of RH caseIssue Brief #1 [RH] due Your class cards and one-page résumé are due in class today

Thursday, February 5, 2009 Assessing a firm’s financial health

Read/prepare: “A Note on Ratio Analysis” (see Syllabus, pp. 19 – 24)Meet in study groups in classBring financial calculator!

Tuesday, February 10, 2009 Using financial ratio analysis for strategic decision-making

Discuss: “A Note on Ratio Analysis” Bring financial calculator to class!

Thursday, February 12, 2009 Conducting library research for strategy case analysis

Read/prepare: Essentials, Chs. 2&11 and Case: “KRCB Television & Radio: The Canary in the Coal Mine?” (Instructor website - download) Class meets in Shultz 2016 with Rick Robison, Business Librarian


Date Topic(s) Assignment(s)Study groups meet after orientation

Tuesday, February 17, 2009 Strategic plans, technology change, governance & social responsibility

Discuss: “KRCB Television & Radio: The Canary in the Coal Mine?”Issue Brief #2 [KRCB] due

Thursday, February 19, 2009 Competitive forces Read/prepare: M. E. Porter’s (2008) “The Five Competitive Forces That Shape Strategy” (on reserve at Shultz)Study groups meet in class

Tuesday, February 24, 2009 Industry attractiveness and key success factors

Read/prepare Essentials, Ch. 3 (pp. 32-43 only) and Case: “Mendocino Brewing Company – 1996” (Instructor website - download)Issue Brief #3 [MBC] due

Thursday, February 26, 2009 Situation analysis: environmental scanning & forecasting techniques

Read/prepare: Essentials, Ch. 3 (pp. 43-53 only); “A Note on Conducting Situation Analysis” (Instructor website - download); and Case: “ZAP and the Electric Vehicle Industry” (Instructor website - download) Study groups meet in class

Tuesday, March 3, 2009 Competing for industry futures – I

Discuss: “ZAP and the Electric Vehicle Industry” Issue Brief #4 [ZAP] due

Thursday, March 5, 2009 Situation analysis: internal scanning techniques

Read/prepare Essentials, Ch. 4 andCase: “Kimpton Hotel & Restaurant Group” (Instructor website - download) Study groups meet in class

Tuesday, March 10, 2009 Competing for industry futures – II

Discuss: “Kimpton Hotel” Issue Brief #5 [KH] due

Thursday, March 12, 2009 Using SWOT analysis for strategy formulation

Read/prepare Essentials, Ch. 5 andCase: “Oliver’s Markets” (Instructor website - download) Study groups meet in class

Tuesday, March 17, 2009 Generic strategies Discuss: “Oliver’s Markets”Issue Brief #6 [OM] due

Thursday, March 19, 2009 Corporate strategy Read/prepare Essentials, Ch. 6 andCase: “Diageo plc” (Instructor website - download)Study groups meet in class


Date Topic(s) Assignment(s)

Tuesday, March 24, 2009 Benefits and limits of diversification

Discuss: “Diageo plc”Issue Brief #7 [DEO] due

Thursday, March 26, 2009 Strategy implementation: scenario planning

Read/prepare Essentials, Ch. 7Case: “Sula Vineyards” (Instructor website - download)Study groups meet in class

Tuesday, March 31, 2009 No class – State holiday

Thursday, April 2, 2009 Study groups meet in classDevelop financial forecasts for Sula

Tuesday, April 7, 2009 Entrepreneurial strategy, valuation & control

Discuss: “Sula Vineyards”Issue Brief #8 [SV] due

Thursday, April 9, 2009 Read/prepare: Essentials, Ch. 8Case: “Globalization of Beringer Blass” (Instructor website - download)Study groups meet in class

Tuesday, April 14, 2009 No class – Spring break

Thursday, April 16, 2009 No class – Spring break

Tuesday, April 21, 2009 Strategy implementation: globalization & organization structure

Discuss: “Globalization of Beringer Blass”Issue Brief #9 [BB] due

Thursday, April 23, 2009 Read/prepare: Essentials, Ch. 9 andCase: “Abercrombie & Fitch” (Instructor website - download)Study groups meet in class

Tuesday, April 28, 2009 Strategy implementation: leadership, HRM & diversity

Discuss: “Abercrombie & Fitch” Issue Brief #10 [AF] due

Thursday, April 30, 2009 Strategy evaluation, control, & sustainability Course wrap-up and tips for the final exam

Read/prepare: Essentials, Ch. 10 and“The Strategic Plan” (Instructor website - download)Distribute take-home final caseStudent course evaluations

Tuesday & Thursday, May 5 & 7, 2009

Review Syllabus pp. 13 – 15Teams meet and work on final case

Tuesday and Thursday, May 12 & 14, 2009

Effective oral presentations

Team Final Presentations (see Syllabus p. 14 for assigned times)


Date Topic(s) Assignment(s)Tuesday, May 19, 2009 Putting it all together Take-home final due @ 11:00 a.m.

(Section 3 or 2:00 p.m. (Section 6)


SUGGESTED GUIDELINES FOR APPROACHING A CASE

In approaching a case, keep in mind that there is no single, right solution. Each case describes a complex situation and there may be a number of equally valid analyses. Try to put yourself in the place of the person who is facing the problem(s) and who is required to make decisions and act. You may want to consider the following factors in your analysis. This list is far from complete, but I hope it will be a helpful start.

1. What is the problem—or problems? You may want to list the problems and prioritize them. Are the problems short-term, long-term, new to the organization, chronic, etc.?

2. What is the time framework? How urgent is the situation?

3. What is the nature of the organization? Who are the key people involved? What are the key relationships? What is the philosophy of this organization?

4. What industry, competitive, economic factors/trends are significant? How do they influence the current situation? How might they influence your future action or the probable responses of rivals?

5. What financial information is important (costs, cash flow, ratios, margins, debt leverage, etc.)? How do these data impact your analysis and recommendation?

6. What are the significant marketing considerations? What is the product or service? Who is your market and what is your target customer or segment? How do you price, promote, distribute?

7. What are the significant production/operational considerations? How and where do you produce? Are your operations labor-intensive? capital-intensive? What lead times are required?

8. What are the key human resource management issues? How do they impact on your course of action, particularly in its implementation?

9. What business are you in? What is the organization’s strategy? Is it consistent across functions? What are the risk of/potential rewards from retaining this strategy?

After analyzing the case, generate as many solutions as you deem appropriate. Consider the risks/tradeoffs involved in each alternative and then decide what you would do in the situation and why. What is your plan of action? (Be specific!) How are you going to implement it? (Be specific!) Be prepared to support your recommendations, while remaining open to different, possibly better ideas.


TAKE-HOME FINAL EXAM: TIPS FOR DOING A FIRST-RATE JOB

Please use the Issue Brief format outlined on page 4 of this syllabus. Below are some suggested guidelines for preparing your team’s written case analysis for the take-home final examination:

Summary & Preview. Present a very brief overview of the managerial problem to be solved or challenge to be mastered and what action(s) need to be taken. Consider the context in which a decision needs to be made. Develop a situation analysis, consisting of a brief (4 to 5 sentence) statement of the organization’s mission, generic and subsequent strategies, and present state of affairs. Follow this with a statement of the recommendation that will be proposed. Front-load your writing! Keep in mind that you are asked to take the perspective of the General Manager.

Industry/Environmental Analysis. Describe and analyze the major factors, characteristics, or trends external to the organization that impact the strategic issues in question.

Organizational Characteristics. Summarize the strategy being pursued by the organization and its resulting strengths and weaknesses in relation to its competitors and/or external environment.

Strategic Problems/Issues. As a result of the analyses in the two preceding sections, certain significant potential opportunities and threats facing the organization should begin to emerge.

Reasonable Alternatives to Consider. From among the strategic issues identified in the preceding section, develop a range of feasible strategies or plans of action. Show how alternative strategies may be ranked across a risk-reward spectrum. What are the tradeoffs? Careful assessment of proposed actions and potential outcomes lends credibility to your argument. Typically, the best papers are those that do a superior job of generating/evaluating alternatives.

Identification and Implementation of Selected Strategy. The most desirable alternative from the preceding section should be elaborated in sufficient detail to let your reader know what is to be done and why. Explain the interdependencies among facets of the strategy and offer some indication of the economic, competitive, and environmental consequences over time. What are some of the issues to be addressed in implementing the proposed strategy? Consider feasibility, cost, resource needs, timing, and fallback position(s).

Conclusion/Next Steps. Briefly summarize and re-state the central issues covered in your analysis. Let your reader know what you expect to be done next to follow-up your analysis and recommendations.

Supporting Calculations/Documentation. Prepare evidence to support the arguments you are making. Exhibits such as tables, diagrams, charts, graphs, etc. should be numbered consecutively, placed at the end of your paper, and explained in the body of your analysis. Original (i.e., library) research and production of visual aids typically distinguish better from mediocre papers. Caveat: avoid reproduction of published data, articles, web pages, etc. A good rule of thumb is: do not use an exhibit unless it is the result of original thinking and analysis (e.g., number-crunching, summation, or visualization).


CLASS PARTICIPATION As Woody Allen once quipped, “80% of life is just showing up!” Each student is permitted one (1) unexcused absence from class. Your contributions to case dialogues will be evaluated on the basis of the following:

1. Your understanding and appreciation of case facts;2. Your analysis of case data through the use of functional area techniques and general

management concepts in the readings; and3. Your recommendations for management decision and action that arise from analysis.

Below is a checklist to help you evaluate and improve your effectiveness in class discussions:

___ Are you a good (active) listener? Are the points that you are making relevant to the discussion? Are they linked to the comments of others? Are you willing to interact with other class members?

___ Have you demonstrated an ability to suspend judgment?

___ Do you show an ability to ask good questions (inquire and reflect)?

___ Are you willing to challenge assumptions?

___ Do your comments add to our understanding of the situation?

___ Do your comments show evidence of analysis of the case (case preparation)?

___ Do you distinguish among different kinds of data such as facts, opinions, beliefs, concepts, etc.?

___ Do you demonstrate a willingness to share knowledge?

___ Are you willing to test new ideas, or are all comments made “safe”? (An example of a “safe” comment is repetition of case facts with no analysis or conclusions.)

___ Do your comments clarify and highlight the important aspects of earlier comments and lead to a clearer statement of the concepts being covered?

My assessments of your participation will be made on the basis of your attendance and preparedness for class, your responses to questions that arise in dialogues, as well as your voluntary participation.


Core Purpose Exercise

I. The “Empire’s DeathStar” game

Suppose you could sell your business to someone who would pay a price that everyone inside and outside the company agrees is more than fair (even with a very generous set of assumptions about the expected future cash flows of the company). Suppose further that this buyer would guarantee stable employment for all your employees after the purchase—but with no guarantee that those jobs would be in the same industry. Finally, suppose you were to learn that the buyer plans to kill your company after the purchase: its products and/or services would be discontinued, its operations would be shut down, its brand names would be shelved forever, etc. Your company would utterly and completely cease to exist. Would you accept this offer? Why or why not? What would be lost if your company were to cease to exist? Why is it important that your company continue to exist?

II. The “I Won the Lottery” game

You are a top-level manager in your organization. Suppose you woke up tomorrow morning and discovered that you suddenly had enough money in the bank to retire—comfortably. Would you nevertheless keep working for this organization? What deeper sense of purpose would motivate you to continue to dedicate your precious time and creative energies to this company’s efforts?


OUR VALUES

The most important thing in life is to decide what is most important.

What should our organization, department, unit, or study group team stand for? What should be the values by which we operate? Look over the list of values below. Circle any values that “jump out” because of their importance to you. Then write your top three values, in order of importance, below the list. Feel free to add values, if needed.

truth persistence resources

efficiency sincerity dependability

initiative fun trust

environmentalism relationships excellence

power wisdom teamwork

control flexibility service

courage perspective profitability

competition commitment freedom

excitement recognition friendship

creativity learning influence

happiness honesty justice

honor originality quality

innovation candor hard work

sustainability prosperity responsiveness

financial growth respect fulfillment

community support fairness purposefulness

integrity order strength

peace spirituality self-control

loyalty adventure cleverness

clarity cooperation success

security humor stewardship

love collaboration support

1._____________________________________________________________________________2._____________________________________________________________________________3._____________________________________________________________________________Source: K. Blanchard & M. O’Connor (1997), Managing by Values, San Francisco: Berrett-Kohler, p. 112.


FINAL EXAMINATION

CASE: TBA [Value = 20% of course grade, 10% for yourteam’s case presentation + 10% for the team paper]

READINGS: Review Essentials text (all)

TEAM CASE PRESENTATIONS: Tuesday & Thursday, May 12 & 14, 2009 in class.Please see schedule on page 14.

WRITTEN ANALYSIS DUE: Tuesday, May 19, 2009, in class @11:00 a.m. or 2:00 p.m.(Late papers will be lowered one full grade for each day overdue)

FORMAT: Review Syllabus: Case Analysis Guidelines

Study group teams will be assigned a case to be announced. Teams should prepare a 20-minute presentation of the case and a 5-page paper addressing the following questions. Each presentation should allow for additional 10 minutes of Q&A. Be polished and professional: external judges may be present!

1. Describe this company’s strategy in the last 5 years. [33%]

2. Evaluate this strategy, in the context of the competitive pressures the business faces. Conduct financial ratio analysis. Perform an industry and competitor analysis. To do these analyses, you may need to conduct some primary or secondary research. [33%]

3. How would you advise the CEO and her/his team to proceed? Prepare an action plan for this company. Generate and evaluate long-range strategic alternatives against a stated set of goals and objectives. Show your financial forecasts and underlying assumptions behind those forecasts. Discuss how the chosen alternative should be implemented. [33%]

Recommendation: outline your answers prior to writing. Do not spend time regurgitating case facts or photocopying exhibits from published or electronic sources. All work must be original. In grading the examination, my emphasis will be on analysis, formulation and implementation of competitive strategy.

Front-load your writing! Your written analysis should not exceed five (5) typed, double-spaced, 8 1/2 x 11 pages, exclusive of exhibits. No cover pages or binders, please. Please type your name, the title, and the page number in the upper right-hand corner of each page. Cite primary and secondary research sources in standard bibliographic format. Exhibits and endnotes should be numbered consecutively (i.e., 1, 2, 3,…) and presented at the end of your paper; be sure to refer to them in the body of your analysis.

Submit your case analysis on May 19th in both e-mail and hard copy format. Keep a copy of your paper for yourself, as your originals will not be returned to you. Course grades may be requested via e-mail on or after May 25, 2009. Be present and prepared to question other presenters on May 12 & 14. Attendance will be taken both days.


TEAM PRESENTATIONS

Teams should prepare a 20-minute presentation of the assigned case covering the topics below. Each team should prepare for an additional 10 minutes of Q&A.

1. Identify the decision facing this organization; clearly state your recommended solution and why.

2. Perform an analysis of the company’s internal situation and external environment, including industry & competitors. Caution: some analytical tools may be more appropriate than others.

3. Substantiate your analysis with facts and data from the case. Answer the “So what?” question.

4. Develop alternative solutions, in the context of the competitive pressures the organization faces.

5. Prepare an action plan for this organization.

6. Generate, list, and evaluate the pros and cons of short- and long-range strategic alternatives.

7. Show clearly why your recommendation is superior to other alternatives.

8. Discuss how the chosen alternative should be implemented and if it is feasible.

9. Create a timeline and implementation plan.

10. Show evidence of professionalism, polish, teamwork, and clarity.

11. Prepare appealing visual aids, handouts and vocal techniques that support your presentation. NOTE: put your team number, team members’ names, and the presentation date in the upper-right hand corner of any handouts you create.

12. Involve each member of the team in the presentation and Q&A session.

NOTE: TEAMS MUST BE PUNCTUAL.

TuesdayMay 12,

2009

TuesdayMay 12,

2009

TuesdayMay 12,

2009

ThursdayMay 14,

2009

ThursdayMay 14,

2009

ThursdayMay 14,

200910:00 – 10:301:00 – 1:30

10:35 – 11:051:35 – 2:05

11:10 – 11:402:10 – 2:40

10:00 – 10:301:00 – 1:30

10:35 – 11:051:35 – 2:05

11:10 – 11:402:10 – 2:40

Team 1 Team 2 Team 3 Team 4 Team 5 Team 6


BUS 491— Seminar in Strategic Management Team Presentation Score Sheet

REVIEWER’S NAME__________________________________

TEAM NUMBER______________________________________ DATE: ______________________

[Key: 0 = Marginal; 1 = Satisfactory; 2= Superior] [Comments]

PROBLEM IDENTIFICATIONSpecified problem and solution 0 1 2

Depth of understanding of issues 0 1 2

Logical call to action 0 1 2Total (0-6) --------------------------------

ANALYSISInternal assessment & financial analysis 0 1 2

External and competitive assessment 0 1 2

Factual support and relevance 0 1 2Total (0-6) --------------------------------

RECOMMENDATIONSReasonable range of alternatives 0 1 2

Appropriateness of alternatives 0 1 2

Risks & contingencies clearly identified 0 1 2

Implementation timeline 0 1 2

Feasibility in terms of know-how, time, cost 0 1 2Total (0-10) --------------------------------

TEAMWORK & PRESENTATIONVisual aids, sharing of workload, clarity,

effectiveness in Q&A

Marginal = 0Satisfactory = 1

Superior = 2Total (0-2)

--------------------------------

TOTAL POINTS--------------------------------


NOTE: Total possible points = 24 points. A = 20–24 pts., B = 16–19 pts., C = 12–15 pts., D = 9–11 pts., F = < 9 pts.


MANAGER’S TOOLKIT EXERCISE

1. Note functional area to which you have been assigned. Join your team!DO: Review core course(s) in your functional area.FOLLOW-ON: Identify spokesperson & choose recorder.

2. Write a “Table of Contents” for a textbook in your functional area.DO: Put on overhead transparencies.FOLLOW-ON: Use lists, headings, subheadings & bullet points

3. Get to know members of your team. Note individuals’ strengths and deficiencies. What would you look for in an ideal study group partner?

DO: Prepare 10-minute presentation.FOLLOW-ON: How would you advise us to review this material?

4. [30 minutes] Present your team members and Table of Contents to classDO: Introduce team members to the section.

Define terms used in your presentation.

5. Audience: what were the strengths and deficiencies of this team’s presentation? DO: What advice would you offer for improvement?

ThursdayJanuary 29,

2009

ThursdayJanuary 29,

2009

ThursdayJanuary 29,

2009

ThursdayJanuary 29,

2009

ThursdayJanuary 29,

2009

ThursdayJanuary 29, 2009

10:30 – 10:401:30 – 1:40

10:40 – 10:501:40 – 1:50

10:50 – 11:001:50 – 2:00

11:00 – 11:102:00 – 2:10

11:10 – 11:202:10 – 2:20

11:20 – 11:302:20 – 2:30

Study Team 1“Accounting”

Study Team 2“Finance”

Study Team 3“Management”

Study Team 4“Marketing”

Study Team 5“Production/Operations”

Study Team 6“Social Issues/

Ethics”


Robin Hood - A Mini Case StudyJoseph Lampel, New York University

It was the spring of the second year of his insurrection against the High Sheriff of Nottingham that Robin Hood took a walk in Sherwood Forest. As he walked he pondered the progress of the campaign, the disposition of his forces, the Sheriff’s recent moves, and the options that confronted him.

The revolt against the Sheriff had begun as a personal crusade. It erupted out of Robin’s conflict with the Sheriff and his administration. However, alone Robin Hood could do little. He therefore sought allies, men with grievances and a deep sense of justice. Later he welcomed all who came, asking few questions, and demanding only a willingness to serve. “Strength,” he believed, “lay in numbers.”

He spent the first year forging the group into a disciplined band, united in enmity against the Sheriff, and willing to live outside the law. The band’s organization was simple. Robin ruled supreme, making all-important decisions. He delegated specific tasks to his lieutenants. Will Scarlett was in charge of intelligence and scouting. His main job was to shadow the Sheriff and his men, always alert to their next move. He also collected information on the travel plans of rich merchants and tax collectors. Little John kept discipline among the men, and saw to it that their archery was at the high peak that their profession demanded. Scarlock took care of the finances, converting loot to cash, paying shares of the take, and finding suitable hiding places for the surplus. Finally, Much the Miller’s son had the difficult task of provisioning the ever-increasing band of Merrymen.

The increasing size of the band was a source of satisfaction for Robin, but also a source of concern. The fame of his Merrymen was spreading, and new recruits poured in from every corner of England. As the band grew larger, their small bivouac became a major encampment. Between raids the men milled about, talking and playing games. Vigilance was in decline, and discipline was becoming harder to enforce. “Why,” Robin reflected, “I don’t know half the men I run into these days.”

The growing band was also beginning to exceed the food capacity of the forest. Game was becoming scarce, and supplies had to be obtained from outlying villages. The cost of buying food was beginning to drain the band’s financial reserves at the very moment when revenues were in decline. Travelers, especially those with the most to lose, were now giving the forest a wide berth. This was costly and inconvenient to them, but it was preferable to having all their goods confiscated.

Robin believed that the time had come for the Merrymen to change their policy of outright confiscation of goods to one of a fixed transit tax. His lieutenants strongly resisted this idea. They were proud of the Merrymen’s famous motto: “Rob from the rich and give to the poor.” “The farmers and the townspeople,” they argued, “are our most important allies. How can we tax them, and still hope for their help in our fight against the Sheriff?”

Robin wondered how long the Merrymen could keep to the ways and methods of their early days. The Sheriff was growing stronger and becoming better organized. He now had the money and the men, and was beginning to harass the band, probing for its weaknesses. The tide of events was beginning to turn against the Merrymen. Robin felt that the campaign must be


decisively concluded before the Sheriff had a chance to deliver a mortal blow. “But how,” he wondered, “could this be done?”

Robin had often entertained the possibility of killing the Sheriff, but the chances for this seemed increasingly remote. Besides, killing the Sheriff might satisfy his personal thirst for revenge, but it would not improve the situation. Robin had hoped that the perpetual state of unrest, and the Sheriff’s failure to collect taxes, would lead to his removal from office. Instead, the Sheriff used his political connections to obtain reinforcement. He had powerful friends at court, and was well regarded by the regent, Prince John.

Prince John was vicious and volatile. He was consumed by his unpopularity among the people, who wanted the imprisoned King Richard back. He also lived in constant fear of the barons, who had first given him the regency, but were now beginning to dispute his claim to the throne. Several of these barons had set out to collect the ransom that would release King Richard the Lionheart from his jail in Austria. Robin was invited to join the conspiracy in return for future amnesty. It was a dangerous proposition. Provincial banditry was one thing, court intrigue another. Prince John had spies everywhere and he was known for his vindictiveness. If the conspirators’ plan failed, the Prince’s pursuit would be relentless and retribution swift.

The sound of the supper horn startled Robin from his thoughts. There was the smell of roasting venison in the air. Nothing was resolved or settled. Robin headed for camp promising himself that he would give these problems his utmost attention after tomorrow’s raid.

© Joseph Lampel 1991

Study Questions

1. What is the key decision that Robin has to make now?2. What is he trying to accomplish?3. How would you rate his performance as entrepreneur/strategist? What is he doing well?

Not so well?4. What options are available to him now?5. What do we learn from this case study about strategy?

BUS 491 (03): T & Th 10-11:50 a.m. Dr. Gilinsky/page 21Spring, 2009

A NOTE ON ASSESSING THE FINANCIAL HEALTH OF THE FIRM –THE CASE OF KALARI BURNS, INC.

How do we assess the financial health of the firm? Let’s take a look at Kalari Burns, a company that makes diet plans, as an example. Kalari Burns competes with Jenny Craig and Weight Watchers.

• Key issue in assessing the long-term financial health of a firm is whether or not the corporate system of goals, product-market strategies, investment requirements, and financing capabilities are in balance.

• Also depends on the perspective of the person asking the question.• Has the condition of the company changed over the four-year period? How?• What changes are most significant, as indicated by financial ratios?• What is the context in which these changes took place?

A. Steps: 1. Look at Kalari Burns’ financial statements [see Exhibit 1]2. Calculate ratios:

—Profitability—Activity—Leverage—Liquidity

B. Profitability ratios—How profitable is the company? • Profit after tax as a % of sales (ROS)• Operating profits as a % of total assets (ROA or ROI)• Profit after tax as a % of equity (ROE)

One measure of a business’s profitability is its “profit as a percentage of sales” as determined by the profitability ratio equation:

Profit after taxesNet sales

The information necessary to determine a company’s profits as a percentage of sales can be found in the company’s .

1. Kalari Burns’ profit as a percentage of sales for 2004 (see Exhibit 1) was $ divided by $ or %.

2. This represented an ( ) increase or ( ) decrease from % in 2000.

3. The improvement in profitability resulted from an ( ) increase or ( ) decrease in cost of goods sold as a percentage of sales and from an ( ) increase or ( ) decrease in operating expenses as a percentage of sales. The only adverse factor(s) was/were the increase(s) in the .

4. Management and investors often are more interested in the return earned on the funds invested than in the level of profits as a percentage of sales. Companies operating in businesses (e.g, computer software, service bureaus, employment agencies) requiring very little investment in assets often have low profit margins but earn very attractive returns on invested funds. Conversely, there are numerous examples of companies in very capital-intensive businesses that earn miserably low returns on invested funds,


despite seemingly attractive profit margins (e.g., public utilities, telecommunications companies).

Therefore, it is useful to examine both the level and the trend of the company’s operating profits as a percentage of total assets (ROA aka ROI). To increase the comparability across companies within the same industry, it is useful to use profits before taxes and before any interest charges (earnings before interest and taxes or EBIT). This allows the analyst to focus on the profitability of operations without any distortion due to tax factors and/or the method by which the company has financed itself.

Kalari Burns had a total of $ invested in assets at year-end 2004 and earned (before interest and taxes)$ during 2000. Its operating profit (as a percentage of total assets) is calculated as follows:

Profit before taxes + Interest chargesTotal assets

In 2004 this figure was %, which represented an ( ) increase or ( ) decrease from % in 2000.

5. From the viewpoint of the shareholders, as equally important figure is the company’s return on equity (ROE). Return on equity is calculated by dividing profit after tax by the owner’s equity:

Profit after taxesOwners’ equity

It indicates how profitably the company is utilizing shareholders’ invested funds.

Kalari Burns had a total of $ of owners’ equity at year-end 2004 and earned (after taxes)$ during 2004. Its ROE was %, which represented an ( ) improvement or ( ) deterioration from % earned in 2000.

C. Activity ratios—Are there any hidden problems?The second basic type of financial ratio is the activity ratio. Activity ratios indicate how

well a company employs its assets. Ineffective utilization of assets results in the need for more finance, unnecessary interest costs, and a correspondingly lower return on capital employed. Furthermore, low activity ratios and/or a deterioration in the activity ratios may indicate uncollectible accounts receivable or obsolete inventory and equipment.

“Total asset turnover” measures the company's effectiveness in utilizing its total assets and is calculated by dividing total assets into sales:

Net salesTotal assets

As with any other ratio, caution must be exercised due to timing and basis of sales (cash v credit) and valuation of assets (e.g., age and collectability of accounts receivable, LIFO v FIFO inventories, method of depreciation used to value net fixed assets, etc.).

1. Total asset turnover for Kalari Burns in 2004 can be calculated by dividing $ into $ . The turnover ( ) improved or ( ) deteriorated from times in 2000.


2. Since the use of total assets may mask important changes in one of the specific asset categories, it may be useful to examine the turnover ratios for each type of asset. Exhibit 2 gives some examples:

• Average collection period (days)• Inventory turnover (times)• Fixed asset turnover (times)

3. So far, we have discussed three measures of profitability: they are (1) (2) and (3) .

We have also discussed four activity ratios which measure the effectiveness with which the company is using its assets: they are: (1) (2) (3) and (4) .

4. The improvement in Kalari Burns’ operating profits as a percentage of total assets between 2000 and 2004 was primarily due to:(1) (2) (3) and (4) .

D. Leverage ratios—How soundly is the company financed?The third basic type of financial ratio is the leverage ratio. The various leverage ratios

presented in Exhibit 2 measure the relationship of funds supplied by creditors and the funds supplied by owners. The use of borrowed funds by profitable companies will improve the return on equity. However, it also increases the riskiness of the business and, if used in excessive amounts, can lead to default or liquidation.

1. The improvement in Kalari Burns’ profitability, as measured by its return on equity, from 5.8% in 2000 to 16% in 2004, resulted from the combined impact of , and .

2. The financial riskiness of Kalari Burns ( ) increased or ( ) decreased between 2000 and 2004.


E. Liquidity ratios—Is the company able to meet current obligations as they become due?The fourth basic type of financial ratio is the liquidity ratio (see Exhibit 2). These ratios

assume that, if the company is struck by adversity, current assets are much more readily and assuredly convertible into cash than fixed assets. They also enable the financial manager to consider and project the amount of working capital (short-term financing) needed to pay next year’s (or even next month’s) bills. The current ratio—dividing current assets by current liabilities—relates these fairly liquid assets to the claims that are due within one year—the current liabilities. The quick ratio (or “acid test”) is similar to the current ratio but excludes inventories from the current assets because it is assumed that they often are difficult to convert into cash, particularly if inventories are comprised mainly of work-in-progress rather than resalable raw materials or finished goods.

Remember…Not enough to crunch numbers

Also need to look beyond numbers, see what they meanHow does this company’s financial performance stack up against other firms in the diet plan industry?

Study Questions1. How was Kalari Burns doing in 2004, relative to 2000?2. Is this a financially well-managed company? How do we know?3. Where do you see areas of strength? Weakness?4. What contextual factors might influence your analysis?


Exhibit 1— Kalari Burns, Inc., Income Statements and Balance Sheets: 2000 and 2004

All numbers in $000 Consolidated Income StatementsEnding Dec. 31 2000 2004Net sales $44,991 $70,100 Cost of goods sold 23,715 33,504 Gross profit $21,276 $36,596 Operating expenses (exc. depreciation) 17,508 26,208 Depreciation 1,570 2,030 Interest expenses 1,041 1,418 Income before taxes $1,157 $6,940 Federal income taxes 82 3,200

Net Income $1,075 $3,740

Consolidated Balance SheetsAt Dec. 31 2000 2004AssetsCash $639 $1,079 Accounts receivable 11,936 18,145 Inventories 14,672 24,162

Total current assets $27,247 $43,386 Net fixed assets 6,518 7,706

Total assets $33,765 $51,092

Liabilities and Stockholders' EquityNotes payable—banks $8,480 $2,719 Accounts payable 2,154 6,528 Accrued expenses and taxes 1,660 7,482

Total current liabilities $12,294 $16,729 Long-term debt 3,088 11,230 Stockholders' equity 18,383 23,133

Total liabilities and stockholders' equity $33,765 $51,092


Exhibit 2 — Kalari Burns, Inc., Financial Ratio Analysis: 2000 and 2004

Formula 2000 2004 RemarksI. Profitability

Return on Sales Profit after taxes/Net sales

Return on Assets Profit bef. taxes + Interest charges/

Total assets

Return on Equity Profit after taxes/Owners' equity

II. ActivityTotal asset turnover (x) Net sales/

Total assets

Average collection period, days Accounts receivable/

Net sales/365 days

Inventory turnover (x) Cost of goods sold/

Inventories

Fixed asset turnover (x) Net sales/Net fixed assets

III. LeverageDebt: Assets Total debt/ Total

assets

Debt: Equity Total debt/Shareholders'

equity

Long-term debt: Equity Long-term debt/Shareholders'

equity

Times interest earned (x) Earnings before interest and taxes/Interest charges

IV. LiquidityCurrent ratio (x) Current assets/

Current liabilities

Quick ratio (x) Current assets – Inventories/

Current liabilitiesV. Compound Annual Growth Rates (CAGR)

4 yrs. CAGR, Sales4 yrs. CAGR, Net Income

Total Assets


Bullshit Bingo

Do you keep falling asleep in meetings and seminars? What about those long and boring conference calls? Here is a way to change all of that!

How to play: Check off each block when you hear these words during a meeting, seminar, or phone call. When you get five blocks horizontally, vertically, or diagonally, stand up and shout BULLSHIT!!

Synergy Traction Core Competencies

Best Practice Bottom Line

Monetize Staycation 24/7 Outliers Benchmark

Value-added Proactive Win-Win Think outside the Box

Fast Track

Maverick

EmpowerKnowledge

BaseAt the End of

the DayGo(ing) Rogue

Tipping Point Ballpark “C” Level Game-changer

Bandwidth

Testimonials from satisfied players:

“I had only been in the meeting for five minutes when I won.” -Jack W. - Boston

“My attention span at meetings has improved dramatically.” -David D. - Florida

“What a gas. Meetings will never be the same for me after my first win.” -Bill R - New York City

“The atmosphere was tense in the last process meeting as 14 of us waited for the 5th box.” -Ben G. - Denver

“The speaker was stunned as eight of us screamed 'Bullshit' for the third time in 2 hours.” - Kathleen L. - Atlanta

COURSE CALENDAR

Documents

Transcript of COURSE CALENDAR